Strong data centre growth in South Africa — but it isn’t all good news

The South African data centre market is growing, with the country home to approximately 60% of the installed data centre capacity on the continent.

However, growth rates are reducing, and data centre companies face a challenging environment to keep their operations running seamlessly.

MyBroadband asked several data centre providers in South Africa about the state of the data centre market in the country.

Citing data from Xalam Analytics, Open Access Data Centres CEO Ayotunde Coker said the growing cloud provider footprint is helping drive growth in the market.

“According to Xalam Analytics, SA has about 60% of the installed DC capacity in Africa, and this is projected to grow as demand moves from enterprise to ‘cloudification’, with the growing cloud provider footprint driving growth,” said Coker.

Despite South Africa’s compound annual growth rate being expected to be slower than Nigeria, Kenya, and some Sub-Saharan African countries, its data centre market is growing faster than these nations.

“As edge data centres take hold, they will be a notable part of the growth trajectory,” Coker added.

However, he noted that these growth rates are slowing.

“Growth rates are reducing — although as noted earlier — this is from a much higher base, in comparison to other Sub Sahara Africa regions),” said Coker.

“Rates of growth will continue to slow in comparison to other regions, however, South Africa will continue to dominate the Africa DC installed base.”

BCX told MyBroadband that a growing reliance on digital technologies, cloud computing, and the expansion of online services is driving the data centre market’s growth in South Africa.

“A significant contributor to the demand for data centre space is the increasing reliance on digital technologies, cloud computing, and the expansion of online services,” it said.

Dr Ayotunde Coker, CEO of Open Access Data Centres

“South Africa has recently seen an influx of Hyper-scalers entering the market and providing a local footprint of their services for consumption.”

However, it noted that load-shedding presents a significant challenge for data centre providers, with fuel prices and the cost of maintaining generators driving up business costs for data centre customers.

“BCX notes that there is an ongoing increase in data centre operation overhead costs is a significant concern for their customers to manage, and load-shedding is playing an increasingly crucial role in driving these expenses,” it said.

“The controlled rolling blackouts initiated during periods of high demand or supply shortages have shown particularly pronounced effects on data centre operations and costs.”

“The cost of diesel fuel required to run these generators can be substantial, especially during extended periods of load-shedding,” BCX added.

Fuel prices can fluctuate substantially, and customers must budget for this unpredictability. However, there are ways to mitigate these effects.

“By pooling backup power infrastructure, shared hosting data centres optimise generator utilisation,” it said.

MTN South Africa said that, from a customer perspective, it itself requires growing data centre capacity.

“As newer technologies are deployed, there is a requirement to host key functions in regionalised data centres,” it said.

“MTN has invested in both the data centre facilities and the connectivity that connects these data centres to ensure high availability of these environments.”

MyBroadband also asked several other data centre operators for comment, but they had not answered our questions by the time of publication.

Now read: Best ERP Cloud software for businesses in South Africa

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Strong data centre growth in South Africa — but it isn’t all good news